Quality Conundrum

The health care industry finds itself in a period of flux and transition as it moves from a volume-based model of operation to one that focuses on value. As the case with most industries, change does not happen at one unifying moment but comes slowly and sporadically.

In the volume or fee-for-service model health care providers are paid based on the volume of services provided. Under this system, there were always incentives to “do more.” The more tests you order, patients you see, procedures you do, the more money you will make. The critical problem with this model, of course, is that what is best for the patient, can some times get left out of the equation. We  now find ourselves moving (and rightfully so) towards a reimbursement system that is “value-based,” where hospitals are rewarded (and penalized) based on the quality of care they provide. Under this system quality is measured on a variety of factors, including patient outcomes, hospital-acquired infections and readmission rates. For patients, this means safe, appropriate, and effective care with enduring results, at reasonable cost.

As I stated before, change comes slowly. Many providers, like Jupiter Medical Center, have embraced and have moved towards a quality-based system, while payers still operate and reimburse for services based on volume of care. So the question becomes, how do you move to the value side and not hurt your organization’s bottom line while still having to work within a fee-for-service world?

My answer: you do so pragmatically and thoughtfully. You might have to start out implementing a value model in only certain areas of operation, that for a time, run along side your fee-for-service model of care. And then as incentives change, you might then be able to integrate more and more pieces of your service into the overall operation. 

This approach is not without its challenges and significant amount of analysis.  For example, at Jupiter Medical Center we have built a clinically integrated model that has subcomponents that can be implemented as the reimbursement models change. We have been working on bundled payment models for orthopedics, which we implemented in collaboration with our physicians.  This plan is working well in the Medicare population and we are now working with a commercial payer to design a new payment model for non-Medicare patients.

Regardless of your approach, organizations need to begin to move into the “value model space” especially as consumers take a larger and more active role in their health care selection with an eye on value.